The average home and business insurance claim reached a record £10,000 in the third quarter of 2026, driven by rising repair costs and an unprecedented volume of subsidence claims linked to the hottest UK summer on record, according to the ABI’s latest Property Insurance Tracker.
The total amount paid out by insurers rose 1% to £1.5 billion across July, August and September, even as the total number of home and business claims fell 4% to 142,000. The divergence reflects higher costs per claim rather than greater frequency.
Subsidence at a record high
ABI members received 13,000 new domestic subsidence claims in Q3 2026, up from 8,000 in the same period in 2025 and the highest quarterly figure on record. The Met Office has provisionally identified 2026 as the hottest UK summer on record, with the prolonged period of hot, dry weather significantly increasing ground movement risk.
The average insurance payout for subsidence damage to a home held at a record £20,000 for the second consecutive quarter. For brokers with residential and commercial property clients, the subsidence surge is a direct prompt to revisit cover adequacy and whether business interruption or alternative accommodation limits reflect current claim durations.
Severe perils
The average domestic fire claim reached its third highest quarterly level on record at £38,000. The average domestic flood claim cost £28,000, ranking as the third most expensive peril over the quarter despite coming in slightly lower than previous periods. The average subsidence payout of £20,000 was the second most expensive.
Premium picture
The average annual home insurance premium for Q3 2026 was £329, unchanged year on year though up £4 from Q2. Combined buildings and contents policies averaged £389, up £3 year on year. Buildings-only premiums fell £13 year on year to £310, while contents-only policies fell £7 to £118.
Premium stability alongside rising claims costs points to a potential adequacy gap – particularly for clients who have not updated their sums insured to reflect current material and labour costs.
Chris Bose, director of general insurance and international policy at the ABI, said: “These record costs show the severe damage that extreme weather is now causing for communities and the need to boost resilience. It’s vital that new homes are built to withstand increasingly frequent extreme weather and that we work together to improve the long-term resilience of our homes and businesses.”